Energy Department Defends Loan to Company Building Electric Cars in Finland

The Department of Energy is standing by a $529 million loan guarantee to a company building an electric car line in Finland.

A department official, in a lengthy response posted on a government blog Thursday night, confirmed that the company Fisker is assembling its Karma electric car at its "overseas facility."

The response comes after ABC News reported that the Obama administration gave the green light for the company to move the manufacturing to Finland two years after announcing the loan.

But Energy Department spokesman Dan Leistikow said none of the U.S. loan money contributed to the production work in Finland.

"The Department's funding was only used for the U.S. operations," Energy Department spokesman Dan Leistikow wrote. "The money could not be, and was not, spent on overseas operations. The Karma also relies on an extensive network of hundreds of suppliers in more than a dozen U.S. states."

He said the first part of the loan, $169 million, supported engineering work at Fisker's U.S. facilities as the company "developed the tools, equipment and manufacturing processes for Fisker's first vehicle" -- though that work so far has not contributed to a production line in the U.S.

But Leistikow said the rest of the loan is still supporting U.S. production of another vehicle line called the Nina.

"Fisker is using this funding to bring a shuttered General Motors plant in Delaware back to life and employing more than 2,500 workers. Fisker was attracted to this site in part by the opportunity to rehire some of the trained, dedicated workers who lost their jobs when that plant closed," Leistikow said. The department later clarified that 120 workers have been hired at the site to date, with the rest set to be hired by early 2013.

For the Karma line, founder Henrik Fisker reportedly claimed the company could not find a manufacturer in the U.S. for the job. So the production went to Finnish company Valmet Automotive, along with 500 manufacturing jobs.

A company spokesman told FoxNews.com that Fisker had "explored the possibility of producing the Karma in the U.S."

"However, there are no contract manufacturers like Valmet in the U.S., and none of the established domestic automakers were willing to partner with Fisker to provide an manufacturing option in the U.S. that would work for the Karma program," the spokesman said.

The development comes amid widespread scrutiny of the Obama administration's loan programs for alternative energy companies and projects. The bankruptcy of government-backed solar panel firm Solyndra in September touched off a frenzy of questions on Capitol Hill over whether U.S. taxpayer money is being used wisely to prop up the industry.

The ABC News report noted the political connections enjoyed by Fisker and another company, Tesla Motors, which together received about $1 billion in loans. Fisker reportedly is backed by a firm that counts ex-Vice President Al Gore among its partners. The article said just 40 of Fisker's Karma cars have been produced so far, and that Tesla is consistently losing money.

But Leistikow said Tesla has added 1,000 new jobs since receiving the government support. He said both companies' loans were approved "on the merits after extensive review."

"They represent exactly the type of cutting edge, innovative manufacturing this program was intended to support, and are part of a large, robust portfolio of investments that are helping America become more globally competitive," he said.